Thursday, 14 June 2012

Q: Why are dentists nicer than Banks?

A:  A dentist puts a filling in your teeth to save you pain whereas a Bank will take your fillings and be totally indifferent to your pain.

I am not intending to name my bank - it is one of the Big Four - because I strongly suspect that the others are just as bad (but see the end of this post for a slight step back from that).

I hear you asking what has
to cause me to expectorate the pacifier?
The story begins about 1am on 17 April at Colombo Airport when I withdrew 50,000 Sri Lankan Rupees (about AUD 376) to cover expenses while in that fine country.  On returning home I checked my on-line credit card statement a few times to make sure no-one has been playing tricks with it (as has happened on one occasion in the past).  All good, with one charge, on 9 May, of AUD 5.80  for cash advance interest.  (This works out to about 21% per annum, which is outrageous but expected.)

However I found today that another charge of AUD 5.62 was made with the same description.  Que?  I had not taken another cash advance because I know about the sort of vicious interest rates they attract.

So I ring the bank's central chatline and find that they are getting heavy calls (ie they have understaffed their call centre because it saves them a few brass razoos and they don't care how long their customers have to wait).  Eventually I get to speak to someone who hears my story and says he will pass me to a credit card specialist.  This turns out to be a nice young lady.  What emerges is that just paying the balance due on your statement (including, you might think, the cash advance) doesn't pay off the cash advance.  You have to reduce the balance owing to zero.

I didn't believe this, as I have never experienced the issue before, so she gave an example.

  1. You take out a cash advance of $100 and buy stuff, before your statement issue date (say April 1) , worth $100.
  2. Your statement shows, on April 1, an amount owing of $200 to be paid on (say) 15 April.
  3. On 5 April you buy another $200 of goodies so your account balance is $400.
  4. On 15 April you pay off the $200 due but because the account balance is $200 not $400, they continue to charge you interest on the cash advance!
When I erupted - the words burglary and bullshyte were among those mentioned - she said in a polite and professional manner that this is stated in the terms and conditions of my card (an 80 page document last time I checked).  She then explained this to the effect of there actually being 2 balances: one for cash and another for goods.  I then asked how I could resolve this, knowing that if (to continue the example above) I paid off the apparent residual $200 'now' it wouldn't get to my account for a few hours and there could well be some other bill come in leaving a balance of $10 or suchlike.

The only real way to do this is to ring the banks hotline and ask them to transfer funds into your account while you are on the line to set the account to a zero balance.  My concern about the lags was a real issue and going into a Branch was not good as most staff there wouldn't understand the problem.  My nice staffer did fix (most of - see below) the problem for then and there (apparently by crediting the amount of interest owing), for which I thanked her.

So, the key thing is that if you are unfortunate enough to make a cash withdrawal on a credit card get the account balance down to zero as soon as possible.   One way of doing this would be to transfer money into your credit card account before you go away.  At the very least ask your bank what their policy is on these issues.  Unfortunately you will never get to speak to the real villains who are the hedge fund dudes who own the banks but if enough people start to dodge the charges it will put a small dent in the bank's  (obscene) profits.

Since writing the foregoing I have checked the situation with one bank's Travel cards. I appreciate that
  • this reduces to 3 the possible identity of my bank; and
  • there will be doubt, especially going to developing countries, if a Prepaid Credit card will be accepted; but
it seems like an avenue worth exploring.

Late update.  The next month I happened to glance at my account to find that there was an amount of $0.01 shown for interest charges on cash advance.  Think of Mt St Helens!  I rang my bank and politely asked what was going on.  The first person I spoke to was right across this: my friend from last time had reimbursed me the charges but hadn't gone the next step and changed the plan for the transaction from cash advance to purchases.  My New BFF would do that for or else the 1 cent would follow me around forever!

No comments: